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House committee passes bill to repeal CFPB's guidance on auto lending

August 14, 2015
There is growing opposition to the Consumer Financial Protection Bureau’s plans for regulation of the auto lending sector, with a bipartisan bill designed to remove the agency’s authority making progress in gaining support for an eventual change in legislation to block its current approach. 
Now with 126 co-sponsors among the full House, the U.S. House Financial Services Committee on July 29 approved House Resolution 1737, a bill to revoke the CFPS’s auto lending guidance bulletin, which the agency issued in 2013. This suggests auto lenders impose controls on dealer interest rate mark-ups or eliminate dealers’ discretion to mark-up loans and instead use another reward mechanism, such as a flat fee per transaction.
The bill was passed at the committee by 47 votes to 10. As well as withdrawing the guidance, it says the CFPB should be required to give notice and have a public consultation before issuing guidance and make a full study of the costs and impacts of any guidance on consumers and other recognized groups, such as small businesses. 
In addition, the bill’s proponents wants the agency to make public the data and methodologies it uses to assess whether its guidance is being met, in areas such as possible discrimination in lending. 
"We want to ensure that the CFPB’s auto finance policy is based on accurate analysis and is based on the best interest of consumers," said Rep. Ed Perlmutter, a Democrat from Colorado, who introduced the bill in April with Rep. Frank Guinta, R-Texas.
The CFPB’s use of a particular methodology to assess whether dealers and lenders are discriminating against ethnic minority groups and others has been strongly criticized by the National Automobile Dealers Association, among others.
 
 

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